M/S. Paruchuri Sri Lakshmi vs. The Assistant Commissioner (St)

Held

The Court allowed the writ petition, setting aside the impugned Assessment Order. The Court noted that the issue involved was squarely covered by a previous order dated 20.11.2020 passed by a Division Bench of the same High Court in W.P.No.45971 of 2018. In that prior case, the assessment order was set aside insofar as it related to the levy of GST on the value of by-products (broken rice, bran, and husk) treated as part of the consideration paid for milling of paddy. The reasoning in the prior judgment, which the current Court followed, was that these by-products should not be considered part of the consideration for milling services. The operative direction was to set aside the assessment order in terms of the previous judgment. No costs were awarded. The issue of the specific amount of GST in dispute was not explicitly decided in this judgment, as it was disposed of based on the precedent.

Facts

The petitioner filed a writ petition challenging an Assessment Order dated 29.10.2020, passed by the 1st respondent (authority), for the tax period July 2017 to November 2018, under the CGST Act, 2017. The challenge was specifically to the levy of GST on the value of broken rice, bran, and husk, which were obtained during the milling of paddy and retained by the petitioner. This retention was in addition to milling charges and was considered compensation for the petitioner supplying their own rice to the 3rd respondent to make up for shortfalls in yield. The petitioner sought to set aside the assessment order and direct the 3rd respondent to pay the GST liability.

Key Issues

1. Whether the levy of GST on the value of broken rice, bran, and husk, retained by the petitioner as compensation for supplying their own rice to the 3rd respondent to make up for shortfalls in paddy milling yield, is contrary to law, facts, and without jurisdiction, under the CGST Act, 2017? The petitioner argued that the assessment order was illegal and without jurisdiction, particularly concerning the levy of GST on the by-products retained by them. They contended that these by-products were not part of the consideration for milling services but rather a form of compensation. The revenue or State's arguments are not explicitly recorded in the judgment.